Who Is the Customer, Anyway?

Surprisingly, one of the most difficult and frustrating problems organizations face with customer relationship management (CRM) initiatives is identifying the customer. The problem isn't the classic retailer's issue of not being able to capture customer names from cash transactions. Rather, it's the more complex organizational issue of knowing which of many customer constituent groups to emphasize.

Is it B2C, B2B or B2B2C?

It's no longer as simple as one person in your organization identifying the buyer and developing a relationship with that buyer over time. In fact, depending on your business model, these various customer constituencies might require that you identify and distinguish end users from influencers, decision-makers and perhaps even facilitators in administrative or accounts payable staff. Or, if you operate through a number of channels such as in the high-tech or healthcare industries, your customers may also consist of different groups such as agents or partners in addition to the end consumers or users.

Business to Consumer

If your company operates B2C, then the issue of defining the customer is relatively straightforward. You merely have to identify the customer at the point of sale. While this is not always easy in a cash environment, many organizations now ask customers for their name in addition to using reverse credit card and telephone cross-referencing techniques to capture customer names. From there, it's a relatively straightforward matter to associate their transaction behavior with their names in the database, conduct analysis, segment them and develop a relationship through differentiated contact strategies.

Figure 1: Business to Consumer

Business to Business

Identification of customers is somewhat more difficult if you operate in a B2B or business-to-business environment. Organizations may be able to identify the purchasing manager but not the ultimate user or buyer of products or services. While your business certainly wants to have a relationship with the purchasing manager and also the person ensuring that the invoice gets paid, it's just as, or perhaps more, critical to understand who the end user is. These "customer" constituents present just as many opportunities for positive or negative interactions. It's important to look at the lifetime value of the ultimate customer as well as the value of the entire organization.

Figure 2: Business to Business

Business to Business to Consumer

The changing economy of the 1990s has produced entirely new business models for many organizations, resulting in an even more complex set of customer constituents. New channel and partner relationships or other new ways of doing business complicate this definition of the customer.

Figure 3: Business to Business to Consumer

Consider the pharmaceutical industry. Originally, the primary customer was the physician. The relationship was created and maintained when representatives called on the doctor, explained the benefits of their products, left samples and went away. Meanwhile, revenues poured in when doctors wrote new prescriptions for patients, and those were "filled-to-order" by pharmacists. Those simple days are long gone. Today managed care organizations, pharmacy benefit plans, employers and even caregivers and patient advocacy groups represent new and important customer groups with whom pharmaceutical

companies must also create relationships. Each of these organizations has its own set of often-conflicting needs that must be understood. The value proposition may be very different for each.

Travel also operates largely in a B2B2C environment. Consumers look to travel agents to help them consolidate and purchase air, hotel, car rental and entertainment options. Once purchased, however, the entire customer experience is between each of the travel businesses and the consumers. Each of these travel providers must develop customer relationships with both the travel agents and the end consumers. When traveling on business, the employer is yet another customer constituent that cannot be ignored.

Who Owns the Customer?

Once you've identified which customer groups with whom you want to have a relationship, you face the often more difficult task of determining who should own the various customers. For many organizations, this is a political hot potato that creates organizational strife around structure, compensation and key performance measures.

Ultimately, to effectively execute CRM, the customer ownership can be effectively resolved by focusing on optimizing the customer experience. Understanding and addressing customer needs at each stage of their life cycle will ensure that the customer is truly at the center of organization decision making.

Before you get too far into your CRM initiative, don't ignore the critical step of defining just who your customer constituents are and who within your organization should own the customer. If you fail to take this important step, you will find it very difficult to create true relationships that enhance customer value and ultimately the bottom line of your organization.